PC industry is now on a two-year downslide

The state of the PC industry is not looking great. According to analyst firm Gartner, worldwide PC shipments fell 5.7 percent in the third quarter of 2016 to 68.9 million units. That marks the "the eighth consecutive quarter of PC shipment decline, the longest duration of decline in the history of the PC industry," Gartner writes in a press release issued today. The firm cites poor back-to-school sales and lowered demand in emerging markets. But the larger issue, as it has been for quite some time, is more existential than that.

"The PC is not a high priority device for the majority of consumers, so they do not feel the need to upgrade their PCs as often as they used to," writes Gartner analyst Mikako Kitagawa. "Some may never decide to upgrade to a PC again." The threat, of course, comes from smartphones, which have more aggressive upgrade cycles than PCs and have over time grown powerful enough to compete with desktop and laptop computers at performing less intensive tasks. Tablets too have become more capable, with Apple pushing its iPad Pro line as a viable laptop replacement.

The threat to the PC industry is an existential one

PC makers are feeling the pressure. HP, Dell, and Asus each had low single-digit growth, but Acer, Apple, and Lenovo all experienced declines, with Apple and Lenovo each suffering double-digit drops. Meanwhile, the rest of the PC market, which collectively ships more units per quarter than any of the big-name brands, is down more than 16 percent.

These results do have some bright spots. The PC makers that did experience year-over-year growth did so largely on the strength of 2-in-1 devices and strong sales in the US, which indicate a clear direction for the market going forward. There’s also evidence that cheaper notebooks are becoming a more attractive replacement option as older computers get either handed down or given away. "While our PC shipment report does not include Chromebooks, our early indicator shows that Chromebooks exceeded PC shipment growth," Kitigawa writes.